60 day rollover

L1: 60 day rolloverDear 72T,
I have taken a disbursement from one of my IRA”s for 100% of the capital with the intent to rollover the funds within 60 days. These funds aredelivered by ACH into my checking account. Please note that on the same disbursement date the custodian issued a dividend check for the residual interest in my IRA asthe accountwas brought to zero.This dividend distribution was not requested and my account is coded to reinvest dividends, but they did so automatically due to the account going to zero.I intend to rollover all of the funds receivedat one time.Do you see any problem with the future 60 day rollover, asthe funds are received by different mechanisms (electronic and check) and therefore technically at different times,and shown on the custodians records as two transactionsboth onthe same date, resulting frommy single disbursement request.
Thanks,
Bob2007-02-27 08:38, By: car-tows, IP: [71.254.91.114]

L2: 60 day rolloverTechnically you have two dates to use for the 60-day rollover rule; the first is the date funds hit your account by the ACH transfer, and the second is the date you received the physical check. If you want to complete the rollover on the same date, simply use the earliest date from which to count your 60 days.
When you requested distributing 100% of your IRA account, that pretty much said you don”t want to keep the account open. Any residual income hitting a closed account will automatically be transferred per the distribution instructions. It doesn”t matter that you didn”t change the “dividend reinvestment” instructions. If there is no money in the account, then the account is closed. Now if you went back and added money to that closed account within a short time … check with your particular custodian for their timing rules … then the same account could be used.
Jim2007-02-27 13:57, By: Jim, IP: [24.252.195.14]

L2: 60 day rolloverJim, thanks for your reply. Just to be sure I understand you correctly. My 60 day rollover timing should be geared to the earlier ACH receipt of funds. Also, I will be able to rollover all or part of the combined amounts received, notwithstanding their seperate timedreceipt, as they were disbursed to me on the same day.
Thanks again, Bob
2007-02-27 15:07, By: car-tows, IP: [71.254.91.114]

L2: 60 day rolloverBob,
With respect to the 12 month rollover limitation, you may indeed have a technical violation because your ACH account received it”s distribution earlier than the day you received the mail check. At least, the second one was much the smaller one, so in theory it”s the one that would not be eligible for rollover.
However, the 1099R reporting is not geared to this level of technical infractions, and there will be only one combined 1099R showing both amounts from the first IRA account. I would recommend you simply take a single check for the combined total and deposit in your intended IRA accountprior to 60 days and tell them it is a rollover contribution, and that will be the end of it. I have never heard of the IRS being concerned with this kind of technical infraction, even though they never really become aware of them under the current reporting mechanisms.
2007-02-27 21:19, By: Alan S., IP: [24.116.66.98]

L2: 60 day rolloverAlan,
Would appreciate ifyoucould please embellish onthe point of technical violation.You stated, “you may indeed have a technical violation because your ACH account received it”s distribution earlier than the day you received the mail check. At least, the second one was much the smaller one, so in theory it”s the one that would not be eligible for rollover.”
Based on the above, I am interpreting that there is no question as to the ACHamount being fully eligible for rollover (100% or partial amount) and that if I want, I could justrealize the very small checkamount as income (early distribution), without any effect tothe ACH amount”srollover eligibility.
Thanks again, Bob2007-03-01 10:11, By: car-tows, IP: [71.254.91.114]

L2: 60 day rolloverBob:
How much was the check you received?
Jim2007-03-01 13:50, By: Jim, IP: [24.252.195.14]

L2: 60 day rolloverJim,
Check wasabout $150.
Thanks,
Bob2007-03-01 21:47, By: car-tows, IP: [71.254.91.114]

L2: 60 day rolloverBob:
Yes, you “technically” received the two amounts on different dates, but I”m not sure the IRS would really get upset about trying to tax and penalize you for a $150 infraction. In fact, since both distributions occurred on the same date and you only received them on separate dates due to the methd of distribution, I think the IRS might not even consider this a “technical violation.” Like Alan said, if you write one check to the new IRA custodianfor the entire amount you received and base the 60 days on the larger, ACH action date,it will look like everything happened at one time. You will only get one Form 1099-R and one Form 5498.
Unless one of the tax pros has some compelling stories aboutsomeone incurring penalties due to “two rollover actions” within the same 12-months involving $150, this might be the time to play “IRS roulette” and treat it as one action.
Bill and Gordon, what do you think?
Jim2007-03-02 07:14, By: Jim, IP: [24.252.195.14]

L2: 60 day rolloverI would do as Jim summarized. However, if this is a “sleep at night” issue you could always just declare the $150 as taxable and all rollover questions would be eliminated (as long as the large amount gets rolled within the 60 days).
Of course, you still have the 12 month embargo on further rollovers from the new IRA, so perhaps you should stick to direct transfers from here on. No mention of this being a 72t, so will assume it is not.
2007-03-02 21:07, By: Alan S., IP: [24.116.66.98]